Royal Bank of Canada economists are expecting a recession in the Canadian economy during the second and third quarters of the year, according to a report on Canada’s economic outlook that came out this week.
RBC’s previously stated predictions for a 2023 recession
The economists said higher central bank interest rates will continue to impact the economy in 2023, weighing on household purchasing power and the housing market. At the same time, they said the global manufacturing outlook has softened and eased supply chain disruptions to help slow inflation. It might be possible for consumer spending to be less sensitive to interest rates than expected, the report said, but that would keep inflation pressures sticky and lead to higher interest rates. Those higher rates would in turn cut into household purchasing power later on, “delaying but not preventing a downturn,” the report said.
“The alternative to the relatively mild ‘bumpy,’ economic downturn we expect in 2023 could still look more like a crash landing down the road if substantially higher interest rates, and a larger pullback in economic activity, is required to get inflation fully back under control,” the report said.“No parts of the country will be sheltered from the stiffer economic headwinds,” RBC’s report said, predicting materially, which is benefiting from accelerating offshore oil production.
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